Bankruptcy

Biggest Bail Out Ever, So Far?

By J. Michael McBride

In order to avoid what has been said to be a “complete meltdown” of our financial system, the federal government has announced its largest new financial program ever whereby it will “take bad mortgages off the books” of large banks. “Paulson announced plans Friday morning for a "bold approach" that will cost hundreds of billions of dollars. At a news conference at Treasury headquarters, he called for a "temporary asset relief program" to take bad mortgages off the books of the nation's financial institutions. Congressional leaders had left Washington on Friday, but Paulson planned to confer with them over the weekend.

"We're talking hundreds of billions," Paulson told reporters. "This needs to be big enough to make a real difference and get to the heart of the problem."

One Senator stated that he estimated the total costs of this week’s federal bail outs to exceed one trillion dollars. “Stock markets soared around the world in anticipation of the rescue, with British and Chinese indexes recording their biggest gains ever.” One broker told me that although the details had not yet been worked out, the federal government was also going to insure money market funds so that they would not be able to “break the buck” and fall below a one dollar threshold, as some have already done this week.

Here is a link to one article on this subject:
http://www.politico.com/news/stories/0908/13602.html

Michael

Full post as published by Texas Lawyer Blog on September 19, 2008 (boomark / email).